30.06.2022: Changes in GST rates to take effect from July 18

Several goods and services will cost more from July 18 with the Goods and Services Tax (GST) Council approving an increase in rates to address inverted duty structures and withdrawing some exemptions. Finance minister Nirmala Sitharaman said any increase in GST rates is intended to make up for “inefficiencies” in the value chain.

She said all states are aware of the potential impact of rate rationalisation on inflation and any increase in GST rates will also make up for the tax burden borne by some other activities in that value chain.

“Technology may correct anomalies for inefficiencies and therefore may have a possible impact on revenue collection. But the revenue-neutral rate of the RBI study has been breached to the disadvantage of the system… That calls for a correction,” Sitharaman told reporters after the 47th council meeting here.

The minister said there was no opposition from any state on changes in rates. “The Fitment Committee's suggestions before the GST Council were considered in full, and more or less, all of them have been accepted,” she said.

Slab Changes Deferred
The wider reform of the GST slabs has been put off as the council gave the group of ministers (GoM) on rate rationalisation another three months to give its recommendations.

There was no decision on the taxation of online gaming, casinos, and horse racing, as the GoM that reviewed the issue has been asked to make a final recommendation by July 15, following a representation from Goa on casinos.

The council will meet next in Madurai in the first week of August to consider these recommendations.

The council also heard demands from many states for the extension of the compensation cess that lapses today, but no decision was taken. Many states have said they will take the issue to Prime Minister Narendra Modi.

Opposition-ruled states have demanded that either the revenue-sharing formula under the GST regime should be changed or the compensation period extended by five years.

The council did not take up the issue of GST on crypto assets. Sources said that the final report from the law committee is awaited.

Source: The Economic Times


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